Question

Ban the Box’ (BTB) is the policy that is intended to encourage ex-inmates to participate in the labor force. The policy got its name through banning the question on whether a job applicant has criminal histories from the job application form. Under the BTB policy, employers would be no longer able to weed out applicants who have criminal histories in early stage of hiring process. When the state government of NJ announced that it will implement the BTB policy for both public and private firms, many economists in NJ were worried about if the policy hurts unintended group of people rather than improving employment opportunity of ex-criminals.

Which group do you think might be negatively affected by the BTB policy? And why are economists worried about the adverse effect of BTB policies? Explain your answer carefully and in your answer, be sure to talk about what type of discrimination plays a role in generating such negative effect.

Answer 1

Over the years, economists have been able to devise the basis that productivity of the labour force and problem avoidance is critical to the survival as well as long term profits of firms.

Firms require employees for creation of products and services and any disruption in the production cycle or long-term problems causes them to make significant losses.

Most firms at the moment, prohibit anyone with a criminal background to be a part of the employee list for a firm. This is done in order to ensure safety of others, as well as to avoid any long-term disruptions and negative culture to emerge in a firm.

On the economics point of view, though this reduces the supply of labour force to a certain extent as those people then remain unemployed in the economy, for the firm however in normal circumstances it has no impact as the supply of labour in the market usually far exceeds the demand for it.

Now, coming over to the BTB policies and their negative impact on the stake holders at large, we see that the existing employees will have to compete with additional people in terms of employment opportunities which were earlier not part of the labour force system and were screened out at the initial stage only. This could in turn help in reducing wages for firms as they have higher options to select from. Thus, the current labour force may be forced to take a lesser salary than they earlier used to.

Secondly, the productivity of the labour force may be hit both due to morale issues on one hand and on the other hand such a law may not let firms identify staff members that may pose a threat to security as well as wellbeing of the organization in general. As productivity slows down, the firm further may not be able to produce goods and services at equal cost advantages that it used to earlier and the economy may go through a recession cycle wherein cost of goods remains low and unemployment rises as firms make losses.

Thus, we can conclude by saying that this policy increases those in the labour supply which have the potential of damaging both existing employees as well as productivity for a firm which is of prime importance to any economist as they evaluate economic cycles and recessions.

Please feel free to ask your doubts in the comments section if any.